Chapter 7 Bankruptcy: Who Can File?

Fri, Sep 17, 2010

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Are you thinking of filing for bankruptcy? Read on and learn about the new Bankruptcy Law that has specific criteria on who fall under Chapter 7 bankruptcy rules. For example, individuals whose debts primarily came from the operation of a business, or disabled veterans whose debts were incurred during active duty – they qualify. There are many more and you may be one of them.

The first step in figuring out whether you can file for Chapter 7 is to measure your “current monthly income” against the median income for a family of your size in your state. This “current monthly income” is your average income over the last six months before you file. If your income is less than or equal to the median, you qualify under Chapter 7 bankruptcy.

The Means Test

If your income is more than the median, you must pass “the means test” (a requirement of the new law) to enable you to file for Chapter 7 bankruptcy. The purpose of this test is to figure out whether you have enough disposable income (after deducting certain allowable expenses and required debt payments) to repay at least a portion of your unsecured debts over a five year repayment scheme. If a debtor has sufficient disposable income to fund a repayment plan, he or she falls under Chapter 13 of the Bankruptcy Law.

You cannot file for Chapter 7 bankruptcy if a previous Chapter 7 or 13 case of yours was dismissed within the past 180 days due to: violation of a court order, your filing was fraudulent or abused the bankruptcy system, or you requested dismissal after a creditor asked for relief from the automatic stay.

Your bankruptcy case may be dismissed if:

  1. You hid your assets by unloading them with friend or relatives
  2. You spent for luxury items when you  were clearly broke
  3. You concealed property from your spouse during divorce proceedings
  4. You lied about your income or debts on a credit application

A bankruptcy means test calculator can determine whether you qualify for Chapter 7 Bankruptcy. The means test is a formula designed for filers with primarily consumer debts (not business debts). The criteria limits the use of Chapter 7 bankruptcy to those who can’t truly pay their debts.

You don’t have to be destitute to take the means test. You may earn good monthly income but still qualify for Chapter 7 bankruptcy because you may have a lot of expenses, such as mortgage payments.

How does the Chapter 7 Means Test Works

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Neither Peter Mullison or Colorado Bankruptcy Law Group, LLC is responsible for the content of this post. It is from a syndicated feed from a blog that we read to keep up with current developments in bankruptcy law. To continue reading the blog post, click on the Go to Source link.

Colorado Bankruptcy Law Group, LLC is a personal bankruptcy firm serving clients in the greater Denver area. You can make an appointment by calling 303.341.3403 or clicking the link below.

If you are considering Chapter 7 or Chapter 13 personal bankruptcy, schedule your free, confidential consultation today. Our online scheduling system allows you to schedule a free consultation at a time that is convenient for you.

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Related posts:

  1. Supreme Court Issues Important Ruling About Chapter 13
  2. Am I Eligible to File Bankruptcy?
  3. What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?
  4. I Think I Need To File A Chapter 7 But I’m Scared I May Lose My Home!
  5. Chapter 7: Means Test, Credit Counseling, and Debtor Education Information
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This post was written by:

Peter Mullison - Denver Colorado Bankruptcy Attorney - who has written 228 posts on Denver Colorado Bankruptcy Attorney – Chapter 7 & 13 Lawyers.

Peter Mullison is a Denver, Colorado bankruptcy attorney.

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